December 1 - MarketNews: "The Chicago Board of Trade...experienced its highest
monthly volume ever in November, with turnover for the month increasing 58%
from the prior year to 59,467,507 contracts amid a surge in financial futures
and options trading. Month-over-month volume was up 24.3%, the exchange said.
Trading in the exchange's franchise Treasury futures and options was up 26%
from a month ago and up 67.8% from year-ago figures with a total of 49,911,971
financial contracts traded."

Freddie Mac posted 30-year fixed mortgage rates jumped 9 basis points this
week to 5.81%. Fifteen-year fixed mortgage rates were 8 basis points higher
at 5.23%. One-year adjustable-rate mortgages could be had at 4.19%, down 8 basis
points. The Mortgage Bankers Association Purchase application index was about
unchanged for the week. Purchase applications were up about 5% from one year
ago, with dollar volume up 15%. Refi applications sank 12.3% during the week.
The average new Purchase mortgage declined to $225,500, and the average ARM
dropped to $304,800. ARMs dropped to 32.3% of total applications.

This week's ABS issuance came to about $7 billion (from JPMorgan). Total
year-to-date issuance of $591.9 billion is 37% ahead of comparable 2003. 2004
home equity ABS issuance of $383.5 billion is running 82% ahead of last year's
record pace.

Currency Watch:

Today's bludgeoning put the dollar index down 1% for the week and below 81
for the first time since May 1995. The Euro ended today's session at a record
134.54. The Iceland krona gained almost 5% this week, the British pound 2.65%,
Polish zloty 2.2%, and Hungarian forint 2.0%. The Argentine peso declined almost
1%, with small losses suffered by the Canadian and Australian dollars.

Commodities Watch:

November 30 - Bloomberg (Hector Forster): "Japan, the world's largest consumer
of crude oil after the U.S. and China, said oil imports rose for a fourth consecutive
month in October, gaining 14.3 percent from a year earlier... Japan imports
more than 99 percent of its oil, according to the ministry."

I wouldn't much want to be an energy trader either. January Crude Oil sank
$6.90 this week to $42.54. The Goldman Sachs Commodities index dropped 11.6%
for the week, reducing year-to-date gains to 18.6%. The CRB index declined 2.3%,
with 2004 gains of 11.4%.

November 29 - Bloomberg (Simon Casey): "China, the world's largest steel producer,
will import 37 percent more iron ore this year than in 2003 as mills boost output
to meet domestic demand, Macquarie Bank said. Chinese iron imports will rise
to 203 million metric tons from 148 million tons last year... The nation's steel
output will jump 23 percent this year to 270 million tons."

December 3 - Bloomberg (Allen T. Cheng): "China's technology exports in the
first 10 months rose about 52 percent to $128.3 billion from a year earlier,
said Shan Qingjiang, deputy director general at the Ministry of Commerce's technology
division. For the full year, technology exports will probably climb 41.2 percent
to $160 billion..."

December 2 - Bloomberg (Allen T. Cheng): "China's economy generated 8.4 million
jobs in the first 10 months, achieving the target set by the government, China
Central Television reported."

November 30 - Bloomberg (Allen T. Cheng): "Chinese consumers are the most optimistic
in the world, with 78 percent expecting the economy to improve in the coming
year, according to a survey by market researcher AC Nielsen. China was followed
by India, where 77 percent of consumers said they expect an improvement and
Indonesia with 76 percent, said New York-based Nielsen, which interviewed 14,134
people in 28 markets..."

December 2 - Bloomberg (Joshua Fellman): "Hong Kong real estate sales, mainly
of apartments, more than doubled in November, rising for a 14th month
as property prices and transactions increased in the city because of an economic
rebound. Sales of building units, which also include factory and office space,
jumped to HK$44.51 billion ($5.73 billion) last month... Transactions rose 42
percent to 13,690."

Asia Inflationary Boom Watch:

December 1 - Bloomberg (Seyoon Kim): "South Korean export growth picked up
in November for the first time in six months, with shipments reaching a record
$23.3 billion as manufacturers sold more cars and cell phones abroad. Overseas
sales rose 28 percent from a year earlier after climbing a revised 20 percent
in October..."

December 2 - Bloomberg (Seyoon Kim): "South Korea's foreign-exchange reserves
rose $14.2 billion in November, the biggest-ever monthly gain, as the central
bank bought U.S. dollars to stem the won's appreciation. The reserves, the fourth
largest in the world, reached a record $192.6 billion at the end of last month,
the Bank of Korea said..."

December 3 - Bloomberg (Theresa Tang): "Taiwan's foreign-currency reserves,
the third-highest in the world, rose in November to a record $239 billion, boosted
by net foreign capital inflows and an appreciation of the euro and Japanese
yen. The reserves, which trail those of Japan and China, rose for a 41st month
from $235 billion in October..."

December 1 - Bloomberg (Shanthy Nambiar and Aloysius Unditu): "Indonesian exports
surged 46 percent in October, more than expected, on rising oil prices and demand
for palm oil, nickel and coal in China and India. Exports rose to $7.27 billion
from a year earlier..."

November 30 - Bloomberg (Grace Nirang and Wahyudi Soeriaatmadja): "Indonesia
plans to raise prices of gasoline, diesel and other fuels by as much as 40 percent
next year, and cut subsidies to help narrow the country's budget deficit, government
ministers said."

November 30 - Bloomberg (Kate Mayberry): "Malaysia's broadest measure of money
in circulation expanded in October at its fastest pace since June as banks extended
more loans to consumers and companies. M3, the most closely watched measure
of money supply, rose 10.7 percent in October from a year earlier..."

December 1 - Bloomberg (Khoo Hsu Chuang): "Malaysia's economic growth may exceed
a government forecast of 7 percent expansion this year, Second Finance Minister
Nor Mohamed Yakcop said. 'I'm confident of getting more than 7 percent growth.
Private consumption is the engine of growth; we are in for a good patch of two
years.'"

November 29 - Bloomberg (Francisco Alcuaz Jr.): "The Philippines raised its
economic growth forecast for this year to more than 6 percent, the fastest in
more than a decade..."

December 3 - Bloomberg (Francisco Alcuaz Jr.): "Philippine export growth picked
up in October as electronics makers sold more disk drives and computer chips
to Japanese factories. Overseas sales rose 12 percent from a year earlier to
$3.75 billion after increasing 8.4 percent in September..."

Global Reflation Watch:

December 3 - Bloomberg (Lily Nonomiya): "Japanese companies increased capital
spending more than expected in the three months ended Sept. 30, prompting economists
to predict the government will raise its estimate for growth in the world's
second-largest economy. Capital spending, including investment in software,
rose 14.4 percent from a year earlier..."

November 30 - MarketNews Intl.: "Home construction in France remained buoyant
in October, as three-month housing starts posted a 21.8% rise on the year, while
permits for the same period were up 21.4%, according to non-seasonally adjusted
data released Tuesday by the Construction Ministry."

December 2 - Bloomberg (Todd Prince): "Russia's foreign currency and gold reserves
rose for a 14th-straight week to a record $117.1 billion, nearing the country's
total foreign debt. The central bank said the reserves rose $3.2 billion in
the week ending Nov. 26... Russia's foreign currency and gold reserves are surging
as the central bank buys dollars being brought into the country by oil and gas
exporters..."

December 1 - Bloomberg (Ben Holland): "Turkish exports climbed 45 percent in
November from the same month last year, the fastest pace of growth this year...
The country had exports of $5.8 billion in November... Exports in the 12 months
through Nov. 30 climbed 35 percent to $62 billion..."

November 30 - Bloomberg (Vernon Wessels and Mike Cohen): "South Africa's economy
expanded an annualized 5.6 percent in the third quarter, the fastest pace since
1996 and more than economists expected, as the lowest interest rates for two
decades boosted demand."

November 29 - Bloomberg (Heather Walsh): "Latin American economies will
grow more than 5 percent this year, faster than previously forecast, driven
by demand for commodities and low financing costs, the World Bank's chief economist
for Latin America said."

December 1 - Bloomberg (Guillermo Parra-Bernal): "Brazil's economic growth
quickened to its fastest pace in eight years in the third quarter as lower
interest rates boosted demand at home and exports of soybeans and cars surged.
Gross domestic product grew 6.1 percent in the July-through-September period
from a year ago after expanding 5.6 percent in the second quarter..."

December 2 - Bloomberg (Daniel Helft and Andrew J. Barden): "Argentine central
bank President Martin Redrado said the country's monetary supply will expand
as much as 15 percent in 2005, without stoking inflation and keeping the exchange
rate stable."

Dollar Consternation Watch:

November 29 - UPI: "China Premier Wen Jiabao launched an indirect attack on
the U.S. failure to halt the dollar slide while vowing not to revalue the yuan
under pressure. In the strongest sign yet ofBeijing's
concern at the weakening dollar, Wen questioned the American government's
management of its currency, The South China Morning Post reported... 'China
is a responsible country. We have ensured that the exchange rate of the renminbi
remained stable during the 1997 Asian financial turmoil and, by doing so, contributed
to the resolution of the crisis,' Wen said...'Today, we have to ask a question.
The US dollar is depreciating and there is no attempt to manage it. What is
the reason for this? Shouldn't the relevant parties take measures?' Wen
described the revaluation of yuan as a major economic issue that should not
be carried out under pressure, pointing that change in the exchange rate required
certain conditions. 'The most important is to have a stable macroeconomic environment,
a healthy and complete market mechanism and a healthy financial system.'"

California Bubble Watch:

December 3 - San Francisco Chronicle: "Bay Area home prices are increasingly
outstripping incomes, making it less likely that nurses, teachers and firefighters
can purchase properties here than in other major metropolitan areas... A quarterly
analysis by the California Association of Realtors found Bay Area household
incomes are $82,910 short of being able to afford a median-priced home... a
Bay Area buyer now needs an income of $151,338 to afford a typical home..."

Bubble Economy Watch:

December 2 - The Wall Street Journal (Ann Davis): "Wall Street firms that are
best positioned to take advantage of the bull market in commodities trading,
and those that continue to post strong bond-trading gains, are poised to pay
bankers much higher year-end bonuses than peers, according to a report by Deutsche
Bank AG. Reflecting more-generous bonuses, Goldman Sachs Group Inc.'s total
compensation expense is expected to rise an outsized 37% over last year's, according
to Deutsche Bank's brokerage industry analyst, Richard Strauss. Morgan Stanley
and Lehman Brothers Holdings Inc. are expected to post compensation increases
of 25% and 30%, respectively."

December 1 - Bloomberg (Jeff Green): "Thor Industries Inc. Chief Executive
Wade Thompson, whose company is the world's largest maker of motor homes and
travel trailers, expects the industry's shipments to rise in 2005 for the fourth
straight year... Thompson and chief executives of three rivals said they plan
to hire more workers and Thor, Fleetwood Enterprises Inc., Winnebago Industries
Inc. and other recreational-vehicle makers expect shipments to rise 14 percent
this year to 364,900 units, the best since 1978..."

Mortgage Finance Bubble Watch:

December 2 - Bloomberg (Al Yoon): "Freddie Mac, the second-biggest provider
of financing for U.S. residential mortgages, said investors in Asia purchased
a record 40 percent of its $3 billion five-year reference note sale. Foreign
investors accounted for 48 percent of the notes, which pay an interest rate
of 4 percent and were priced to yield 30.5 basis points more than the U.S. Treasury's
five-year note..."

December 1 - Bloomberg (Kathleen M. Howley): "U.S. home prices increased at
the fastest pace in 25 years during the third quarter, led by Nevada and California,
as the economy improved and low mortgage rates made financing more affordable.
Prices across the nation rose an average of 13 percent from a year earlier,
surpassing the second quarter's 9.8 percent pace, according to a report from
the Washington-based Office of Federal Housing Enterprise Oversight, or Ofheo.
It was the biggest increase since 13.1 percent in 1979's third quarter."

If You Missed it on CNBC Watch:

December 1 - Dow Jones: "The amount of trash produced by U.S. consumers serves
as an indicator of the domestic economy's health, said Michael Hoffman, deputy
director of research at Friedman Billings Ramsey. 'I think we're in a healthy
environment,' Hoffman said Wednesday on CNBC, referring to economic conditions.
Hoffman said the volume of trash has been increasing recently in step with observations
that the U.S. economy is in a recovery."

Pertinent Monetary Economics from Ralph G. Hawtrey

Recent comments from the eminent Stephen Roach: "The asset economy does
not just have its origins in America. It is very much a by-product of support
from global investors and policy makers. One of the outgrowths of an increasingly
asset-dependent economy is a shortfall in income-based national saving. America
has taken this shortfall to an unprecedented extreme. The net national saving
rate -- the combined saving of consumers, businesses, and the government sector
after deducting for the depreciation of worn-out capacity -- fell to a record
low in the 1-2% range in 2003-04. Lacking in domestic saving, America has had
to import foreign saving from abroad -- and run massive current account deficits
to attract that capital."

I have to this time take exception with Mr. Roach's analysis. The "origins"
of our "asset economy" are surely not only here at home, but they reside in
the bowels of Washington and Wall Street. And I would argue that the key issue
today is not a lack of "savings" or our massive current account deficits. These
are only symptoms of the massive Credit Inflation that has ridden roughshod
through our Credit system and economy and now destabilizes the world. And I'm
no fan of the language "attract capital" or "import foreign saving" in this
context. Foreign financial flows are merely the "recycling" of dollar balances
- created in gross excess by our financial sector and federal government - into
U.S. securities. Foreign central banks can be faulted for being complicit with
respect to their dollar purchases. But if they don't buy who will? And are we
really going to continue castigating the lender - the buyer of last resort of
our debt? There should be no confusion surrounding the lack of central bank
enthusiasm for intervening in the markets on our behalf.

I guess we can refer to foreign "savings" or "capital," yet the fact of the
matter is that foreigners are accumulating our IOUs - no more, no less. We consume
and import too much. There is nothing gained by using language that muddles
the issue; no one is forcing us to issue trillions of IOUs or to stock our stores
and homes full with imported goods. There is, as well, no way for export growth
to balance our trade deficit. Furthermore, foreign central banks are only inflating
Credit, not creating or allocating savings and "capital." The bottom line remains
that we are in the midst of history's greatest inflation, and I do believe there
are clear analytical advantages to disentangling a very complex environment
down to the key issues of Credit Inflation, Inflationary Processes and Speculative
Finance.

I also read these days much commentary regarding the American consumer. Some
believe the spendthrift American household sector (along with the abstemious
Asian and European consumers!) is to blame for the current account deficit and
weak dollar. And very bright minds aver that consumer debt provides today's
"weak link" for both fragile domestic and global economic systems. While such
a viewpoint is justifiable, I nonetheless believe it misdirects emphasis away
from what should be the paramount issue. If our quest is to identify the true
source of increasingly destabilizing Monetary Disorder, look to Wall Street
and not Main Street; look at home and not abroad; look in the mirror instead
of throwing stones at our neighbors (especially when our neighbors hold our
mortgages). And the poor unsuspecting American consumer is reacting as one would
expect considering the extraordinary inflation in the value of their assets:
they are merrily enjoying the fruits of their non-labor, while scampering to
buy more inflating assets.

The Paramount Issue - the "origins" - The Core - The Epicenter of the U.S.
Credit Bubble lies in financial sector leveraging and securities speculation.
Not surprisingly, this subject matter is taboo for most economists. But I will
(again) strongly argue that the leveraging of marketable securities has been
and continues as the instrumental source of Credit inflation - the commanding
source of system liquidity, purchasing power, income growth and corporate cash
flow. This mechanism of speculative leveraging - at the direction of the Greenspan
Fed and Wall Street - artificially lowered interest rates, created the perception
of unlimited supply of finance and liquidity, and sustained ultra-low rates
when fundamentals dictated that they should move significantly higher. The collapse
in rates has stoked housing, equities, and increasingly broad-based asset inflation.
This has nurtured an inflationary boom of consumer borrowing and spending excesses,
not to mention rather ferocious "animal speculative spirits." The consumer sector
has responded vigorously to The Source - the ballooning financial sector.

When it comes to cogent analyses of Credit, inflation, and the prominent role
of speculative trading in Inflationary Processes, I am happy to return to the
work of one of my favorite "monetary" economists, Ralph G. Hawtrey (1879-1975).
The focus of Mr. Hawtrey's analysis of the "Trade Cycle" was the instrumental
monetary role played by traders and merchants borrowing to increase the inventory
of goods and commodities. Like few contemporary economists, he was keen to Credit,
Credit inflation, and marketplace speculative dynamics. It's a good week to
ponder the wisdom of Mr. Hawtrey.

Recognizing the prominence that asset markets today have with respect to credit,
liquidity, and income - when reading Hawtrey's "traders," "merchants," "production"
and "goods" think in terms of contemporary systems commanded by asset-based
lending and securities markets. Today's traders leverage bonds and merchants
inventory and hawk securities!

From Ralph Hawtrey:

"An expansion of credit is similarly started through the sensitiveness of
merchants to the rate of interest. Merchants are tempted by cheap
money to hasten their purchases. It is obvious that much depends upon the psychology
of the merchants and other traders, and particularly on their expectations as
to the course of markets. One who expects demand to grow will hasten to
buy... When prices are rising, the holding of goods in stock is itself profitable;
when prices are falling, the holding of goods in stock is a source of loss.
When prices are rising, a very high rate of interest may fail to deter merchants
from borrowing; when they are falling, an apparently low rate of interest
may fail to tempt them... Each state of expectation tends to bring about
its own fulfillment. The optimists borrow freely, and the spending power thus
created brings about the rise of prices they hope for; the pessimists refrain
from borrowing and the shortage of spending power brings about the fall of prices
they fear. It is only at the turning-points, when the banks check
borrowing, or succeed in reviving it, that the optimists and pessimists
are respectively mistaken... Traders' expectations, whether
erroneous or correct, form one element in the problem of the regulation of credit...
The inherent instability of credit, which becomes apparent in the
vicious circle of expansion and the vicious circle of contraction, is due
to the mutual relations of these three factors. Optimism encourages borrowing,
borrowing accelerates sales, and sales accentuate optimism. Pessimism discourages
borrowing, and the consequent decline in sales intensifies pessimism." (R.G.
Hawtrey, The Trade Cycle, Readings in Business Cycle Theory, p. 346).

"The consumers' purchasing power is...largely supplied out of the credits
which the traders borrow from the banks. Credit originates in production
and is extinguished in consumption. The supply of purchasing power is thus
regulated by the transactions which require to be financed." Currency and
Credit (C&C), 1919, p. 10

"Apart from this shuffling of debts, all the credit created is created for
the purpose of being paid away in the form of profits, wages, salaries, interest,
rents - in fact, to provide the incomes of all who contribute, by
their services or their property, to the process of production, production
being taken in the widest sense to include whatever produces value. It is
for the expenses of production, in this wide sense, that people borrow, and
it is of these payments that the expenses of production consist. So we reach
the conclusion that an acceleration or retardation of the creation of credit
means an equal increase or decrease in people's income." C&C p. 40

"Self interest prompts both the enterprising trader ever to borrow more,
and the enterprising banker ever to lend more, for to each the increase in his
credit operations means an increase in his business... The general rise
of prices will involve a proportional increase of borrowing to finance a given
output of goods, over and above the increase necessitated by the increase in
output. This increase of borrowing, meaning an increase in the volume of
credit, will further stimulate trade. Where will this process end?
...The indefinite expansion of credit seems to be in the immediate interest
of merchants and bankers alike. The continuous and progressive rise of
prices makes it profitable to hold goods in stock, and the rate of interest
which the merchant who holds such goods is prepared to pay is correspondingly
high. The credit created...becomes purchasing power in the hands of the
people engaged...; the greater the amount of credit created, the greater will
be the amount of purchasing power and the better the market for the sale of
all kinds of goods. The better the market the greater the demand for
credit. Thus an increase in the supply of credit itself stimulates the demand
for credit... Either the expansion or the contraction of credit may therefore
proceed absolutely without limit, and the corresponding fall or rise in the
value of the monetary unit would therefore also proceed without limit. In each
case all standard of value will be completely lost." C&C, pp. 12/13

"Inflation means a too free creation of credit." C&C p. 365

"We shall find that the expansive tendencies of credit are in perpetual
conflict with the maintenance of a fixed standard of value..." C&C p.
16

"The danger arises from the undue increase in credits; the remedy is to
be found only in the curtailment of credits. The grant of credit rests in
a banker's absolute discretion." C&C p. 23

"Difficulties in enforcing the control of credit occurred at the climax
of trade activity, but that was chiefly on account of the heavy commitments
which involved traders in further borrowing on any terms." The Trade Cycle p.
348

"The existence of any large class of traders, whether they be bankers, underwriters,
finance companies, or any others, with long-period assets and short-period debts,
is always a source of danger." C&C p. 195

"Traders borrow to purchase and hold stocks of goods or securities, and bankers
encourage them to increase these stocks, and so to increase their borrowing,
by lowering the rate of interest... As prices rise, the quantity of credit needed
to finance a given consignment of goods increases in proportion, and the creation
of credit is still further accelerated." C&C p. 43

"The only effective method of controlling the issues of paper money is to
control the creation of credit, for the demand for legal tender money for
circulation is consequential upon the supply of credit. Hence the need for a
central bank of issue. Inevitably a central bank with a monopoly of a legal
tender note issue must be subject to carefully devised legal or at any rate
administrative restraints...The actual limitations imposed on this right
must be so devised as to guard the community against the various disorders which
may arise from an imperfect standard of value or medium of payment." Page
52

"...inflationism, that insidious financial vice, which seems so attractive,
but overindulgence in which may enfeeble or wreck the system." C&C p.
365

"It is one of the advantages of the standpoint which we have adopted, treating
credit as the primary means of payment and money as subsidiary, that it brings
out the causes and the nature of these cyclical movements with special clearness.
And I think it enables us to trace the instability of credit, not so much to
the banker as to the merchant and the promoter." C&C p. 377

"We have treated money as subsidiary to credit. In a highly-developed system
of deposit banking, such as that of England or the United States, the justification
for this is obvious. Purchasing power is created and extinguished in the form
of credit." C&C p. 380

"When it comes to practical consequences, all that debtor and creditor ask
is that they may know how they stand, that they may be secured against arbitrary
or incalculable variations in the value of the monetary unit... the danger
is that the unit may wander far beyond these limits. Beset by the tendency
of credit towards inflation, it is always liable to fall away from whatever
standard may be adopted. Unless a return to the standard is regarded
as an unequivocal obligation, there is no limit to the possible depreciation.
The unit may follow in the well-trodden path of the assignats, the continental
currency, the Austrian paper florin, the rouble. A return to a standard once
lost is a painful and laborious journey... As Cobden once said of the greenbacks,
after the debauch comes the headache. It is the inherent instability
of credit that is perpetually involving the world in credit expansions... We
traced the instability of credit to its source... We found that the initiative
in production rests with the merchant and the promoter, the dealer in commodities,
and the dealer in capital issues." C&C p. 375/76

To wrap this up, the dollar "monetary unit" is in free-fall and our Creditors
are being punished. "All that debtor and creditor ask is that they may know
how they stand, that they may be secured against arbitrary or incalculable variations
in the value of the monetary unit." We are witnessing a truly extraordinary
development, the loss of confidence in the world's main reserve currency. And
surely the consensus will stick with the story that a weaker dollar is no real
problem, and this fallacy may survive a little longer. After all, at this point
it's Bubble Business as Usual for the U.S. Credit System. The falling dollar
lends support to the blow-off stage of Credit Bubble excess. Heightened inflationary
pressures at home (including equity prices!) augment Credit excess, while rising
prices of commodities and non-dollar things - along with incredible liquidity
excess throughout Asia and global "developing" financial markets - exacerbate
Credit profligacy globally. But that's precisely why they're called "blow-offs,"
and this one's for the history books.

But financial folly is mercilessly sowing the seeds... The Source - the highly
leveraged U.S. Credit system - is now acutely vulnerable to higher rates. And
I do believe it has reached a point where low rates are self-defeating - only
exacerbating Monetary Disorder and a dollar crash. And the problem is that it
will take significantly higher rates today to suppress inflationary forces and
support the dollar than it would have last year or even last month. Dollar confidence
has faltered not coincidently as inflationary pressures have broadened and mounted.

When rising rates commence the de-leveraging process, the illusion of endless
liquidity will be challenged. Levitated asset prices from U.S. stocks and bonds,
to emerging securities, to California homes will be immediately vulnerable.
In this regard, it is worth noting that the initial signs of systemic stress
have appeared: speculative bond market profits have largely disappeared, interest
rate markets have turned treacherous, and the yield curve is lurching about.
The leveraged players will see few good alternatives other than battening down
the hatches. And derivative players - reeling from chaotic trading in currency,
energy, commodity, equity, and interest-rate markets - will be increasingly
skittish and risk-averse. Rising risk aversion in an unwieldy Bubble environment
signals we are not many steps away from Acute Financial Fragility. But, as Mr.
Hawtrey recognized many years ago, "There is an inherent tendency on the part
of traders to borrow more and more and of bankers to lend more and more." (C&C
p. 30)